from the time-to-get-it-right dept

As we just mentioned, it looks like there aren't enough votes in Congress to give the President and the US Trade Rep the "fast track" authority they want to cram massive trade agreements down the throats of the American public. Nancy Pelosi, whose statement last week helped signal that it was a real possibility that support for fast track would no longer be likely, has now penned an op-ed for USA Today claiming that fast track is on its last legs, highlighting that Congress (not the executive branch) has the power to regulate commerce with foreign countries. Meanwhile, supporters of trade have put into motion an attempt to salvage fast track, which may lead to a vote as soon as tomorrow -- but seems like a risky gambit that may not succeed.

Meanwhile, the NY Times presents the argument that with the failure of fast track, and very likely TPP with it, it could greatly diminish the US's influence in Asia. This argument has been made for a long time, and it's... questionable at best. The article dutifully quotes the "40% of the global economy" line that supporters of the TPP throw out every other hour or so, but that's really overstating the impact of the TPP. Still, there is a legitimate argument that stronger trade relations between the US and these Asian countries is good for the global economy. But -- and this is the important part that isn't mentioned -- you don't need the TPP to do that.

Furthermore, this ignores the real reasons why the TPP failed. Rather than being about further opening up trading relations, the USTR ramped up the process that has been popular among lobbyists over the past couple of decades: using supposedly "free trade" deals to sneak in all sorts of regulatory schemes that will strongly pressure countries (including the US) to either change laws in certain ways, or block changing laws in other ways. That is, rather than free trade, these deals are actually the opposite. They're backdoor protectionism in the name of lobbyist-driven regulation.

And here's the thing that's amazing. In all of this, no one is talking about how to actually fix this. Pelosi talks about getting a "better deal" for the American middle class. And, sure, that would be great. But the real problem here is that these trade agreements became the playthings of giant corporate lobbyists, rather than democratically driven ideas.

If the TPP and other agreements like TTIP and TISA are really so vital to America's interests, and the interests of the "global economy," then let's have the negotiations and the debate out in public. Other international bodies, like WIPO, have long allowed such negotiations to happen publicly. It may not be how the USTR and its counterparts have negotiated such agreements in the past, but there's no reason they can't change now. Rather than continuing down this path of loading a ton of crap on the TPP tree, just to force through a few simpler free trading principles, why not conduct the negotiations openly, so that the public in all of those countries know what's going on and can see the reasoning behind these deals?

The only reason not to do this is to argue that the public is simply too dumb to understand why these deals are supposedly so important. And if that's your argument, then you're arguing against democracy. If the USTR believes it's representing democracy, then, at the very least, it should lead the way in saying that these trade negotiations will be conducted publicly and in a much more transparent way.

from the still-waiting dept

Last week, the House rejected the President's desired "fast track" authority for trade bills that would have smoothed the way to signing onto trade agreements like the TPP, TTIP and TISA. Technically, "fast track" was voted for, but a related issue around Trade Adjustment Authority (TAA) was rejected (overwhelmingly: 302 to 126). Because the Senate had linked those two, the House needed to as well. Following this, House leadership invoked a procedural move that basically set up a revote for today. Given the massive margin by which TAA failed, I wondered aloud how they would flip so many votes. However, in the back of my head, I worried that the approval of the actual fast track bill meant that the TAA rejection was something of a theatrical production, allowing people to "vote against" it and then let it pass a week later. Turns out my original thought was the correct one.

There is no deal in place, and the House knows it, so it's not even going to try the vote. There was a procedural move to basically delay things through the end of July, so that it could come back, but it does seem clear that the President had no plan B, and really thought that House Democrats -- who have been squawking for months over this -- would eventually come around to back his position.

Meanwhile, on the Republican side, while they're publicly blaming the Democrats for this, they're punishing dissenters in the ranks who threatened some of the procedural shenanigans. And, at the same time, it appears that they're trying to craft a new plan that would separate fast track from the TAA and still move forward with fast track by itself, but that creates a whole host of other problems -- the biggest one being that those who voted against TAA in order to block fast track obviously know what's going on -- and this new move would likely be met with enough resistance to stop it as well.

Everyone agrees that fast track authority for the TPP (and those other trade agreements) is not necessarily dead, but it is on significant life support.

from the down-it-goes dept

Without getting too down in the procedural weeds, just a little while ago, the House of Representatives effectively blocked "fast track authority" for the White House on trade deals -- for now. There was a lot of political maneuvering, and apparently the President started pushing hard on Congressional Democrats to support the trade deals. Many thought the last minute push would make it happen, but with Nancy Pelosi saying that Congress needed to "slow down" fast track, fast track basically came off the table. Again, how this was done involved a lot of gamesmanship and technically a later vote on fast track actually passed very narrowly (219 to 211), but it doesn't matter, because an earlier vote on a different, related measure, needed to pass as well, as the two issues were bundled together. After a bunch of confusing procedural moves, it appears that the House of Representatives will take another shot at this next week, but considering that the key provision went down by a 302 to 126 vote, a lot of arms need to be twisted in the next week and that may not be possible. If the vote next week fails, then things are extremely bleak for the future of "fast track" and the various trade agreements the USTR is pushing.

The whole setup was somewhat confusing, because that official 302 to 126 vote was against Trade Adjustment Assistance (TAA), a program for helping workers whose jobs are displaced by trade. Such a program is usually supported by Democrats, but was rejected here in order to block Trade Promotion Authority (TPA), which was bundled with TAA on the Senate side. The later "show vote" for TPA is meaningless, because it would now need to go back to the Senate for a new vote, and the Senate won't approve TPA without TAA. And, of course, all of this is needed for the USTR and Obama to get the TPP (Trans-Pacific Partnership) approved. And, if you're confused by the fact that TAA, TPA and TPP all sound sorta similar, don't worry: that's all on purpose to confuse the hell out of you and most of the rest of the public.

Rest assured, however, that what happened today was the House of Representatives pumping the brakes on trade agreements like the TPP, after months of really heavy pressure from the White House, which had really ramped up in the past few weeks and days. This is a big blow to the USTR's program. It doesn't mean the House won't eventually get there, but it's not going to be an easy path, and this certainly could put agreements like the TPP (and TTIP and TISA) at risk.

from the do-they-even-understand dept

Two weeks ago, the House Agriculture Committee voted 38-6 to repeal country-of-origin-labeling. (COOL), and now it's the full House's turn. In a 300-131 vote yesterday the "country of Origin Labeling Amendments Act" (HR 2393) passed with the support of a significant number of Democrats as well as the majority of Republicans.

The bill's prompting and passage came after the World Trade Organisation ruled in favor of Canadian farmers, who sued claiming it was "discriminatory" and thus in violation of Free Trade Agreements. The problem? Cattle bought from abroad would have to be segregated from domestic cattle, increasing costs and making imports less desirable.

House Speaker John Boehner, R-Ohio, said after the vote that the last thing American farmers need "is for Congress to sit idly by as international bureaucrats seek to punish them through retaliatory trade policies that could devastate agriculture as well as other industries."

That is, of course, the same John Boehner that has been encouraging the President to get more support for Fast Track, in order to pass more of these "Free Trade" deals that impose more international bureaucrats and will almost certainly lead to more disputes that "require" Congress to "not sit idly by."

[TPP] critics warn that parts of this deal would undermine American regulation -- food safety, worker safety, even financial regulations. They're making this stuff up. (Applause.) This is just not true. No trade agreement is going to force us to change our laws.

Less than one month on, and we have exactly what he claimed 'is not true' happening. A trade agreement forcing a law change, and having what some would claim is an impact on food safety. And it's happening a day or so before the House is voting to create even more such situations while claiming that it won't do this. Do they not even recognize what it is they're voting on?

The inclusion of the Healthcare Transparency Annex in the TPP serves no useful public interest purpose. It sets a terrible precedent for using regional trade deals to tamper with other countries' health systems and could circumscribe the options available to developing countries seeking to introduce pharmaceutical coverage programs in future.

The Annex is clearly intended to target New Zealand’s Pharmaceutical Management Agency (PHARMAC) and some of its provisions will result in new obligations for PHARMAC that will involve transaction costs and could impinge on its flexibility and autonomy. This is particularly worrying given that PHARMAC provides a model pharmaceutical coverage program that is suitable for adoption by developing countries.

Pharmac is New Zealand's system for buying medicines in bulk, which results in substantial savings for the country -- around $3.5 billion since 2000. US drug companies hate it for two reasons: it is able to negotiate lower prices in New Zealand by consolidating purchases for the whole country; and it represents a dangerously successful model that other countries might adopt. The latest leak is important because it confirms that Big Pharma is using TPP not only to strengthen drug patents, but also to attack Pharmac directly.

It has long been a fear that TPP would seek to undermine it, something that the New Zealand government has strenuously denied. The latest clear evidence that Pharmac is indeed under threat has forced the country's prime minister, John Key, to respond, reported here by the New Zealand Herald:

Prime Minister John Key has promised that New Zealanders will continue to pay no more than $5 [US$3] for subsidised prescriptions, whatever happens to Pharmac under the Trans Pacific Partnership.

Jane Kelsey is quoted in the new story as noting that there were only four possibilities:

the Government could increase the health budget overall; the health budget could remain the same but more funding go from non-Pharmac costs to Pharmac; the price the public paid for prescriptions could rise -- which Mr Key ruled out today; and the fourth was that fewer medicines were bought by Pharmac.

Any of the other options means higher taxes in New Zealand or cuts somewhere else to pay for the more expensive drugs TPP is almost certain to bring. That fact has led to a spate of articles in the New Zealand press, and a wider awareness about the negative consequences of the hitherto obscure TPP, albeit rather late in the day.

As a side note, it's worth noting one other interesting aspect, pointed out by Kelsey in her detailed analysis of the latest leak:

The Annex applies very specifically to a 'national health care program' that makes recommendations/decisions about listing pharmaceutical products or medical devices for reimbursement, or the sum of that reimbursement, where these programmes are run by a 'national health care authority'.

The Annex does not apply to direct government procurement of pharmaceuticals and medical devices.

'National' is presumably chosen to preclude such programmes that are run by states and provinces, which are politically sensitive in the US and Canada. In effect, the US has excluded almost all its own programmes, while targeting New Zealand

from the institutionalized-regulatory-chill dept

Last year, the controversy around corporate sovereignty was such that the European Commission felt obliged to slam the brakes on this particular part of the TAFTA/TTIP negotiations in order to try to defuse the situation. The ostensible reason for that unexpected pause was to hold a public consultation on the "investor-state dispute settlement" (ISDS) mechanism. It turned out to be of a very limited kind. Rather than asking whether people wanted corporate tribunals passing judgment on their laws and regulations, the European Commission instead presented the ISDS chapter of another agreement, that with Canada, and posed some rather technical questions about the subtle changes it incorporated.

The Comprehensive Economic and Trade Agreement (CETA) is nominally finished, and is currently undergoing what is known as "legal scrubbing", during which it is checked and polished for final ratification by Canada and the EU, although that's looking much more problematic now than it did a year ago. In the consultation, CETA's ISDS chapter was offered as a kind of template for TAFTA/TTIP. The Commission's argument was that it incorporated many improvements over traditional corporate sovereignty chapters -- which even the EU admitted were flawed -- and could be tweaked further to produce an even better solution for the US-EU negotiations.

Techdirt has already written about one detailed analysis of the claimed improvements in CETA's ISDS that found them seriously wanting. Confirming that view is a new paper from Gus Van Harten, who is Associate Professor of Law at York University in Toronto, Canada. He has taken advantage of the fact that we now have two recent EU free trade agreements with corporate sovereignty chapters: the one with Canada, plus a less well-known deal with Singapore. Van Harten's paper looks at both of them in order to explore to what extent the European Commission's new model for ISDS represents an advance over previous versions, and is therefore something that might usefully form the basis for a possible corporate sovereignty chapter in TTIP. Here's his concluding summary:

The CETA and [EU-Singapore] FTA demonstrate the Commission's willingness to accept ISDS -- based on the model long pushed by Western European countries for developing and transition countries -- that is flawed due to its lack of independence, fairness, and balance. The Commission's approach to ISDS, as represented by the CETA and FTA, does not ensure basic safeguards of judicial independence and procedural fairness. It does not affirm clearly the state's right to regulate. It does not introduce actionable responsibilities for foreign investors or even require foreign investors to resort to domestic courts unless they have been shown not to offer justice. The only notable improvement in the CETA and FTA approach to ISDS, compared to the historical Western European model, is its greater provision for openness.

…

By including ISDS in the CETA and FTA, as forerunners of a TTIP, the Commission would make the problems of ISDS much worse. The Commission aims to expand and lock in a deeply flawed system of dispute resolution -- premised on the special privileging and subsidizing of large companies and very wealthy individuals, with lucrative returns also for ISDS lawyers and arbitrators -- so that it covers most of the world economy.

Although that is pretty unequivocal, it's worth reading the whole paper to understand why Van Harten is so dismissive. It contains many insights along the way, including the following astonishing fact:

The CETA's provision on the arbitrators' power to award damages to foreign investors includes a clause that I have not seen in any investment treaty. The clause says that, in calculating monetary damages, the arbitrators shall reduce the damages to account for "any... repeal or modification of the measure". Thus, the CETA appears to establish an incentive for states to change their decisions in order to appease a foreign investor (who has brought an ISDS claim) as a means to limit the state's exposure to potentially massive liability at the hands of the arbitrators. Put differently, this clause in the CETA appears to institutionalize the ISDS dynamic of "regulatory chill".

from the such-a-mess dept

We've been pointing out for ages that, contrary to what some claim, one of the biggest problems with including things like copyright and patents in international trade agreements like the TPP and TTIP is that it effectively binds Congress' hands, by blocking them from fixing problems associated with those laws. We've highlighted in the past, for example, how the currently leaked draft of the TPP's intellectual property section would require copyright terms to be at least life plus 70 years, which goes directly against what even the Copyright Office's boss, Maria Pallante, has been arguing for, in terms of (finally) reducing copyright terms for the first time, ever.

Specifically, the so-called "orphan works" legislation being pushed by the Copyright Office would limit remedies, including possible compensation or injunctive relief, in certain specific instances for those who make use of "orphaned" works. Yet, the TPP requires that signatories offer monetary damages and injunctive relief to anyone whose work is infringed.

Thus, the Copyright Office's own proposed regulations wouldn't be allowed if the US signs the TPP or would lead to the risk that the US would face challenges either under the WTO or a corporate sovereignty (ISDS) tribunal for failing to adhere to the rules that it agreed to in that trade agreement.

Defenders of the TPP and TTIP insist that neither will change US copyright law as it stands today, but we keep finding examples of where it would bar changes that even the Copyright Office is advocating for. The Copyright Office is supposed to be working closely with the USTR on these agreements, but this raises some serious questions about whether the left hand has any idea what the right hand is doing.

from the worse-than-TPP,-worse-than-ACTA dept

Techdirt has been writing about major trade deals like TPP, TAFTA/TTIP and -- most recently -- TISA more than most. But there's one that we've not mentioned so far: the Regional Comprehensive Economic Partnership (RCEP). As Wikipedia explains, RCEP is:

Between the ten member states of the Association of Southeast Asian Nations (ASEAN) (Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, Vietnam) and the six states with which ASEAN has existing FTAs (Australia, China, India, Japan, South Korea and New Zealand). RCEP negotiations were formally launched in November 2012 at the ASEAN Summit in Cambodia.

As that makes clear, as far as participating nations are concerned, there is a big overlap between RCEP and TPP. The crucial difference is that the US is taking part in TPP, but not RCEP, while China and India are in RCEP, but not TPP. In this sense, then, they are rival free trade agreements, battling it out for economic supremacy in the Pacific region. Given the different views of the leading nations involved -- the US on the one hand, China and India on the other -- you might think the two trade agreements would be turning out to be very different, at least in certain areas. For example, as an interesting EFF analysis of a leaked South Korean RCEP document puts it:

We might then, expect that RCEP could be the "anti-TPP"; a vehicle for countries to push back against the neo-colonial ambitions of the United States, by proposing alternative, home-grown standards on the TPP's thorniest issues such as copyright, patents, and investor protection. Some members of RCEP have indeed spoken out against the TPP because of its unbalanced promotion of strict copyright and patent laws, and some commentators have characterized RCEP and the TPP as competitors.

But based on yesterday's leaks, the promise of RCEP pushing back against the TPP is being squandered. Instead, its IP chapter is turning out as a carbon copy.

Here are just a few of the proposals in the leaked South Korean document:

Prohibiting temporary copies of works in electronic form (a thoroughly misguided and anti-innovation provision that has even been erased from the TPP).

A prohibition on the Internet retransmission of broadcasts, mirroring proposals for a Broadcast Treaty that would inhibit the free use of public domain material.

Inflated awards for copyright or patent infringement, by calculating damages payable for the infringing works on the assumption that they were sold at full retail market value.

Criminal penalties for “commercial scale” copyright and trademark infringement, even where the infringer has not sought or made any profit from the activity.

Suspension of the Internet accounts of repeat infringers, and censorship of bulletin boards that are "considered to seriously damage the sound use of copyrighted works" (whatever that means).

As the EFF post rightly notes, these and the other ideas it lists are even worse than those found in TPP or ACTA, which is some achievement. So the question has to be: why has South Korea adopted this extreme position? The EFF offers an intriguing guess:

Having been pushed into accepting unfavorably strict copyright, patent, and trademark rules in the process of negotiating its 2012 free trade agreement with the United States, Korea considers that it would be at a disadvantage if other countries were not subject to the same restrictions.

If true, that would be a good demonstration of how intellectual monopolies like copyright and patents are not boons that bring benefits to those who embrace them, but banes that are imposed on others in order to hobble them.
The South Korean chapter, with its revelations of just how bad things might be under RCEP, confirms once more the critical importance of leaks when negotiations with potentially far-reaching and global implications are conducted behind closed doors. Moreover:

Now that the text has been leaked and it has been revealed to be so atrocious, we can begin to build pressure for the negotiating countries to open up the process.

After all, it's hard to combat a threat if you don't even know it's there.

from the well-isn't-that-great... dept

Back in 2013, we wrote about a FOIA lawsuit that was filed by William New at IP Watch. After trying to find out more information on the TPP by filing Freedom of Information Act (FOIA) requests, and being told that they were classified as "national security information" (no, seriously), New teamed up with Yale's Media Freedom and Information Access Clinic to sue. As part of that lawsuit, the USTR has now released a bunch of internal emails concerning TPP negotiations, and IP Watch has a full writeup showing how industry lobbyists influenced the TPP agreement, to the point that one is even openly celebrating that the USTR version copied his own text word for word.

What is striking in the emails is not that government negotiators seek expertise and advice from leading industry figures. But the emails reveal a close-knit relationship between negotiators and the industry advisors that is likely unmatched by any other stakeholders.

The article highlights numerous examples of what appear to be very chummy relationships between the USTR and the "cleared advisors" from places like the RIAA, the MPAA and the ESA. They regularly share text and have very informal discussions, scheduling phone calls and get togethers to further discuss. This really isn't that surprising, given that the USTR is somewhat infamous for its revolving door with lobbyists who work on these issues. In fact, one of the main USTR officials in the emails that IP Watch got is Stan McCoy, who was the long term lead negotiator on "intellectual property" issues. But he's no longer at the USTR -- he now works for the MPAA.

You can read through the emails, embedded below, which show a very, very chummy relationship, which is quite different from how the USTR seems to act with people who are actually more concerned about what's in the TPP (and I can use personal experience on that...). Of course, you'll notice that the USTR still went heavy on the black ink budget, so most of the useful stuff is redacted. Often entire emails other than the salutation and signature line are redacted.

Perhaps the most incredible, is the email from Jim DeLisi, from Fanwood Chemical, to Barbara Weisel, a USTR official, where DeLisi raves that he's just looked over the latest text, and is gleeful to see that the the rules that have been agreed up on are "our rules" (i.e., the lobbyists'), even to the point that he (somewhat confusingly) insists "someone owes USTR a royalty payment." While it appears he's got the whole royalty system backwards (you'd think an "IP advisor" would know better...) the point is pretty clear: the lobbyists wrote the rules, and the USTR just put them into the agreement. Weisel's response? "Well there's a bit of good news..."

In a follow-up email, DeLisi states: "I looked at the rules much more carefully over the weekend. There is no doubt, this is our template." And then, of course, the rest is redacted:

It's no surprise that this is happening. Of course when you have industry and government groups set up to be regular "advisors" on certain text (and there's a big revolving door between the two sides), you'd expect the relationship to be chummy and sociable. And it shouldn't be surprising to then see the USTR take the lobbyists "template" and stick it right into the agreement. That's how all of this works, after all. But considering that the agreement is a secret agreement that the public and experts outside of those lobbyist "advisors" are not allowed to see, you have to wonder how it's even remotely possible for the USTR to have a full and fair picture of what those rules are likely to do or the impact on the public.

from the fanciful-geopolitics dept

The TPP saga is entering a critical phase. After the excitement of the initial rejection of Trade Promotion Authority (TPA -- "fast track") in the Senate, followed by the vote in its favor shortly afterwards, attention is now focused on the House, where the outcome is still in doubt. Meanwhile, Australian politicians have finally been granted access to the negotiating text -- but under humiliating conditions, as The Guardian reports:

They were told they could view the current TPP negotiating text on Tuesday "subject to certain confidentiality requirements" and were shown a document they would be required to sign before any viewing.

I will not divulge any of the text or information obtained in the briefing to any party.

I will not copy, transcribe or remove the negotiating text.

The following condition is interesting:

I therefore agree that these confidentiality requirements shall apply for four years after entry into force of the TPP, or if no agreement enters into force, for four years after the last round of negotiations.

This confirms what Techdirt wrote back in 2011: that aside from the final agreement, all the other negotiating texts will be kept secret for four years after the conclusion of the talks. And yet, bad as the Australian deal is, it's more than the public gets when it comes to accessing the text being negotiated in its name. Fortunately, we have WikiLeaks, which has already published three chapters of TPP, and now hopes to leak the rest:

Today WikiLeaks has launched a campaign to crowd-source a $100,000 reward for America’s Most Wanted Secret: the Trans-Pacific Partnership Agreement (TPP).

The most influential, by Peter Petri, Michael Plummer and Fan Zhai, for the East-West Centre, a research institute, forecasts that the deal would raise the GDP of the 12 signatories by $285 billion, or 0.9%, by 2025. It is their numbers that America's government cites when it says TPP will make the country $77 billion richer.

But other researchers predict far more modest gains from TPP:

[The researchers Ciuriak and Xiao] calculate that TPP will raise the GDP of the 12 countries by just $74 billion by 2035, a mere 0.21% higher than baseline forecasts. Others see an even smaller impact. In a paper for the Asian Development Bank Institute, Inkyo Cheong forecasts that America's GDP will be entirely unchanged by TPP.

Given those small, perhaps non-existent, economic benefits, it's perhaps not surprising that US proponents of TPP have shifted their emphasis, claiming that TPP is not so much about economics, as about geopolitical influence -- President Obama's famous "pivot to Asia." A perceptive analysis in the Boston Globe explains why that makes no sense:

The administration's geopolitical case for TPP is fanciful. In the real world, there is no way that new rules for trans-Pacific trade, written without regard to China and without Chinese participation, will somehow pivot the United States into a lasting position of supremacy in China’s backyard.

Four basic facts explain why that is so: First, China is now everybody's biggest trading partner, including America's prospective partners in TPP. Second, the Chinese market represents the major growth opportunity for all these nations.

Third, whatever their concerns about China's increasing military power, Asian leaders have no interest in distancing themselves economically from China -- or from the supply chains that converge there. Fourth, most economists expect China's economic growth will continue to be much faster than that of the United States.

That means that as well as offering the US marginal economic benefits at best, TPP might also damage its chances of engaging meaningfully with China. Sadly, it's probably too much to hope that US politicians will pay much attention to either point once the next round of Congressional haggling over TPA starts again.